Markoulakos Law Blog

Loan in Swiss francs-Borrower protection

Loan in Swiss francs-Borrower protection

During 2006-2009, when the exchange rate between the Euro and the Swiss franc was quite favourable (around 1.60), the Banks systematically led thousands of Greek borrowers to receive home loans in Swiss francs or to convert their home loans, which were initially received in euros, in Swiss francs. The banks’ argument to support this was that the currency conversion of the loan would be particularly favourable for the borrowers as it would ensure a lower interest rate (Libor) and therefore a lower charge on their monthly instalments.

Actually, during that period, around 60-70,000 Greeks received home loans in Swiss francs following the advices of the bank employees, believing that the disputed condition of the currency conversion was a common practice that did not pose any risks for the borrowers’ interests.

However, the banks hid from the borrowers that the currency conversion of the loan would entail shifting the currency risk onto the latter. Therefore, since 2010, when the euro started to drop against the Swiss franc and the exchange rate fell under 1.50, now reaching 0.98, the borrowers found themselves facing an irrational reality: although they had been punctual in paying their monthly instalments, they appear to have a loan balance higher than the one granted to them by 35-40%!!

Our company undertakes to defend the rights of the borrowers pursuing judicial actions which shall first and foremost aim at the nullification of the conditions of the contract that shift the currency risk onto the banks’ clients. The acceptance of our requests means that the loan instalments and the loan balance shall be calculated retrospectively based on the favourable for the borrower exchange rate between the euro and Swiss franc; namely the outstanding balance shall be decreased by at least 30-40% and the remaining instalments up to the maturity of the loan shall be adjusted accordingly.

Given that no bank seems to be willing to solve the problem that has arisen, despite the political unrest and the increasing concern of a large part of the borrowers, the sole solution for the holders of loans in Swiss francs is to dispute their debt in court. Worthy to note is that the first favourable judicial decisions have already been issued from several Greek Courts, as well as from the Court of Justice of the European Union.

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